Analysis of the impact of Sino US trade war on the non-ferrous metal industry

- Apr 08, 2018-

Analysis of the impact of Sino US trade war on the non-ferrous metal industry

Because of a series of factors such as the continuing expansion of the US trade deficit, the approaching of the mid-term election and the low innovation of Trump's support rate and concern for the rise of China, the US plans to impose tariffs on goods imported from China on a large scale and restrict Chinese enterprises to invest in the United States.

The trade war may affect the Chinese industry

In March 23rd, Trump signed a memorandum on China's trade to impose tariffs on goods imported from China on a large scale, with a scale of 60 billion US dollars involved in the tax collection.

From the signing of the memorandum, the biggest impact on China's plans to impose 25% additional tariffs on China, especially in aerospace, information and communications technology and machinery, is also likely to be affected by China's larger exports to the United States, such as household appliances, electronics, 48% of exports and 12% of miscellaneous products. Textiles accounted for 10%, metal products accounted for 7% and so on.

As a counterattack, the Ministry of Commerce of China issued a positive response to the statement, and released a list of discontinued products for the 232 measures for the import of steel and aluminum products in the United States on the 23 day and sought public opinion to impose tariffs on some of the products imported from the United States.

In 2017, the top five categories of China's largest exports to the United States were Electromechanical, audio and video equipment and their parts, accessories, miscellaneous products, textile materials and textiles, base metals and their products, vehicles, aircraft, ships and transport equipment, which accounted for about 77.5% of our country's total exports to the United States, and the first ten. The proportion of class is 93%.

In 2017, the top five products of China's largest exports to China were Electromechanical, audio-visual equipment and its accessories, accessories, vehicles, aircraft, ships and transportation equipment, plant products, chemical industry and related industry products, optics, medical instruments, clocks and instruments. The top five categories accounted for the United States to China The proportion of total exports is about 70%.

Under Trump's current policy, China's high and new technology products, including electromechanical, communication and information technology products, will face serious impact. Such as China's 2020 strategy of aerospace equipment, biomedicine and medical instruments, agricultural machinery equipment, high speed rail equipment, the new generation of information technology and other areas of the impact will not be. It is often obvious.

The potential impact of trade war

The author believes that the possibility of a full-scale trade war is relatively small. In the history of the United States, we also take the case of customs protection or the protection of iron and steel industry, but usually the result is not ideal. One of the reasons Trump's tariff policy is, one of the reasons for the mid-term election vote, is that if this trade war affects the economic situation such as employment in the United States, it is more detrimental to Trump's next election. In China, the contribution of export to China's economic growth is unusual, and China does not want to carry out trade war. A wide range of trade war will only bring about double losses, so it is unlikely that the trade war will be expanded in a wide range from the interests of both sides.

In the short term, China's manufacturing industry is likely to be impacted. In terms of China's export to the United States, the largest proportion of the exports of electromechanical and audio and video equipment, followed by textile, base metals (including steel, aluminum, etc.), transportation equipment, plastic and rubber products. Therefore, we expect that the export of China's manufacturing industry will be blocked in the short term, which may affect the production and operation of China's manufacturing industry. .

The rise of China has made the United States feel pressure, and this trade war is similar to that of the United States to Japan, so we should be wary of the long-term consideration behind this trade protection in the United States. At present, the dominance of the US dollar has been weakened. China is its strong opponent. The Trump administration may force the RMB to appreciate for the global position of the US dollar.


Copper resources in the United States are extremely abundant, and are one of the most important sources of import of copper materials in China. In 2017, China imported 433 thousand tons of copper concentrate from the United States, accounting for 2.5% of the import proportion; 535 thousand tons of waste copper imported from the United States, accounting for 15% of the import proportion; 2 thousand and 100 tons of refined copper imported from the United States, accounting for 0.06% of the import proportion.

Copper concentrate and refined copper, which are the three sources of copper concentrate, refined copper and waste copper, account for a relatively small proportion, which has limited impact on China's raw material supply. The supply of waste copper abroad mainly comes from developed countries and regions, such as Europe and Japan. The waste copper in the United States is the main source of the import of waste copper in China, and it is particularly important for the supply of waste copper in China.

China has terminated tax cuts for scrap aluminum from the United States, and once the tax increases in the United States will lead to a rise in the cost of the US copper import, which leads to a decrease in the import of copper from the United States and the reduction of domestic copper supply.

China's major exports to the United States include Electromechanical, audio-visual equipment and its components (including household appliances, electronics), textile and clothing, furniture lamps and toys and hats, of which mechatronics, audio and video equipment and their parts and components are the largest source of trade differences between China and the United States. In 2017, China's trade surplus with the United States was up to 164 billion 400 million US dollars.

In 2017, China exported 198 billion 500 million US dollars for American Electromechanical, audio and video equipment and its parts and components, 20.2% of exports, 440 million US dollars for exports of copper and copper products, 6.8% of exports, 19 billion 700 million US dollars for vehicles, aircraft, ships and transport equipment, and 18.8% of exports.

In the field of household appliances, the most copper is used in the air conditioning industry, and the air conditioning industry in the United States has a high degree of self-sufficiency. In 2016, the United States household air conditioning sales were 14 million 943 thousand units, about 3/4 were produced for local air conditioning enterprises, and the number of air conditioners imported from China was not more than 3 million 600 thousand units. In 2016, the total number of exports of air conditioners in China was 42 million 730 thousand, of which, exports to the US accounted for a relatively small proportion, and the proportion did not exceed 8.4%.

The imbalance between China and the United States is the direct cause of Trump's provoking trade war. If the United States tries to reduce its trade deficit with China, the mechatronic, audio-visual equipment and its parts and components of the largest source of trade gap may be the key target. Because the status of China made in the field of home appliances and electronic components is irreplaceable in the world, even if the US wants to increase imports from other countries, it will import the relevant parts from China because of the limited short-term capacity transfer. So even if the US taxes China, the end of the U. S. consumers will have to take on it. The cost of tax increases.

The Sino US trade war has limited impact on copper's short-term supply and demand, which is mainly caused by the market's expected reduction of the global economic growth in the future, and then indirectly affects the price trend. On the one hand, the price difference in the near far month is narrowing, the contract of the domestic far month is more than the contract in the near month; on the other hand, the center of the contract price has moved down. As the market worries that the growth of copper consumption is slowing down because of the trade war, the PMI data in Europe have begun to weaken, and the copper price falls below 50 thousand yuan / ton.

There is one point to worry about the supply side. The United States is the main source of China's copper imports. China has terminated tax cuts for scrap aluminum from the United States and will directly lead to a rise in the cost of copper scrap in the United States once the subsequent tax increases in the United States copper waste. Copper imports from the United States to reduce, will further reduce domestic scrap supply.

In June, it will be the key month of the expiration of the Chile mine labor contract, when the labor contracts of the three major mines in LosPelambres, Spence and Escondida will expire, and the companies of LosPelambres and Escondida are now beginning to negotiate with the trade unions ahead of time. The market's worries about the growth of the future global economic growth in the Sino US trade war and the recent fall in copper prices will help to lower the salary expectations of the workers in the contract negotiations, thus making the contract negotiations more easy to proceed.

On the whole, the possibility of the total outbreak of trade war between China and the United States is not very likely. Reducing the trade deficit to China and delaying the rise of China are the two major appeals of the US trade war. Through various "small movements", the United States will be promoted in the negotiations of the United States and the United States will gain more interests. If the Sino US trade war is fully upgraded, it will bring a serious impact to the global economic recovery, and the prices of major commodities will all be hit hard. It is estimated that the probability of trade war's total opening is relatively small, and further attention should be paid to the progress of related events.


In 2017, China's exports to the US accounted for 17% of the total export value of aluminum. In 2017, the export of aluminum accounted for 12% of the domestic apparent consumption, about 4 million 200 thousand tons. According to this estimate, the aluminum exports to the US account for only 2% of the domestic apparent consumption and about 710 thousand tons. But at the same time, due to factors such as low ratio and disguised exports and transshipment, the actual export of aluminum products is limited. In 2017, China imported 618 thousand tons of scrap aluminum from the United States, and estimated China's import tariff by 25% tax rate. In 2018, aluminum import of scrap aluminum will be reduced by 280 thousand tons, and the total aluminum supply in China is about 0.6%. According to the above estimates, the balance of domestic aluminum supply and demand will be less than 1% after offset.

The Sino US trade war is mainly affected by trade concerns about China's macroeconomic growth. In 2017, the proportion of China's exports of electrical and electronic equipment and transport tools accounted for 7% and 19% of China's products. In 2017, under this category, cars and air conditioners accounted for a relatively high variety, and the number of exports from the United States accounted for only 1.89% and 0.55% respectively. At present, the demand for domestic terminal products is still relatively limited, but we still need to focus on the continued impact of the Sino US bilateral policy.

From the perspective of supply and demand, in 2017, the domestic aluminum supply and demand gap was 4 million 680 thousand tons, and the main source of its aluminum products was Canada. Currently, it has applied for exemption from duties. At present, some of the domestic aluminum smelting capacity in the United States is ready to restart production to reduce the impact of aluminum import tariffs, but in the short term it is not enough to make up for it, which will raise the rising water in the United States. Even if the US increased its aluminum smelting capacity, the problem of raw materials and electricity faced by the United States is still to be solved, and still in a state of supply shortage outside the United States, and the price of aluminum abroad is still in a high shock pattern. In terms of foreign alumina, the 6 million tonnes of alumina production capacity in Brazil, which has been affected by the flood, is temporarily restarted. The supply of alumina abroad is still tight and will still support the price of aluminum in foreign countries.


In 2017, 19% of China's galvanized steel was used for export, and most of Southeast Asian countries were exported. Anti dumping duties have always been an important tool for trade giants to carry out tariff wars and trade wars. In 2016, the US Department of Commerce has imposed 209.97% anti-dumping duties and 39.05%~241.07% countervailing duties on Chinese manufacturers. Due to the existence of trade barriers and rising costs, galvanized enterprises have gradually exported to domestic sales. In 2017, China's Galvanized export declined by 4.7%, while the same period in the United States increased 10% of galvanized imports, and anti-dumping has had an impact on the pattern of China's galvanizing export. From terminal consumption, there are more needs for galvanization of home appliances and automobiles.

From the end consumption of zinc, the transportation sector accounts for 20%, and the household appliances consumption accounts for 6%. The two areas are not the focus of the US trade war with China. In the field of transportation, in 2017, China's output of 29 million 940 thousand cars, including less than 1 million 300 thousand exports, exports accounted for 4%, more concentrated in the U. S. exports of auto parts rather than vehicle. In the field of vehicles, ships and transport equipment, China imports the top three of the country from the United States, and later China will fight back from these subdivisions in order to contain the US trade war. In the field of household appliances, in 2016, the air conditioners, refrigerators and washing machines in the white household appliances in China were 2 billion, 1 billion 500 million, and 700 million US dollars respectively, which accounted for a relatively small amount. If the high tariff was taken to bring the export cost of household appliances to rise, the export part of the household appliance enterprises, or to the Southeast Asia, was limited.

Effect of trade war on zinc city is divided into two parts: the direct demand and terminal indirect demand, we believe that nothing to be feared. The decline of galvanized export comes from the Antidumping of many countries in the earlier period. Terminal fields such as transportation and household appliances are not the focus of the US trade war. The short-term market is more affected by the basic surface of the zinc market. The focus of the zinc market lies in the poor expectation of consumption and low stock in the two quarter. Change the basis structure of LME zinc market worried about late more stealth dominance inventory. Although the domestic consumption startup is beginning to show signs, we still need to pay attention to the intensity of going to the warehouse. Because the expected gap in the two quarter has narrowed down, zinc price is still under pressure.


The nickel resources in the United States are poor, and the nickel resources from China are very little. According to the 2017 data, China imports 178 tons of refined nickel from the United States, accounting for 0.07% and nickel mine to zero.

On the export side, China exported 497 tons of refined nickel to the United States, accounting for 2.5%, and nickel iron is zero.

China and the US are relatively small in terms of import and export volume of nickel resources, which can be replaced by other ways to eliminate the impact of trade wars.

According to the export data of stainless steel in 2016 and 2017, the export volume is 3 million 940 thousand tons and 3 million 950 thousand tons respectively (about 15% of China's total output), of which the export to the United States is only about 1.5%, and can be solved through the stainless steel billet (Qingshan Indonesia) in the Taiwan region of China.

In addition, the output of stainless steel in the United States is 2 million 754 thousand tons, which accounts for 2% of its imports from China. It can fill the gap of China's imports by increasing its output.

The impact of trade war on nickel price is limited. Short term mainly affects the market's pessimistic expectation of the future global economic growth, which will affect the price of the whole financial market, and nickel price is difficult to stand alone.

However, there is a 30 day publicity period for the United States to tax China. With the gradual advance of Sino US trade war, the two sides have reached an agreement, the pessimistic sentiment of the market has subsided, the global economy returns to recovery, and the basic metal prices are supported.